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Economic developers worked for decades to escape the region's image as a Rust Belt has-been, weighted down by the demise of anthracite mining and textile manufacturing.

Today, a different stigma may pose new barriers to expansion in Northeast Pennsylvania.

More than two dozen public officials in Luzerne and Lackawanna counties have been charged in the last 15 months in a far-ranging, ongoing public corruption investigation. The net has ensnared three former Luzerne County judges and a commissioner, a Lackawanna County commissioner and a former commissioner, along with lesser public officials.

The scandal adds to the hurdles economic developers face as they try to attract business following the nation's worst economic crisis since the Great Depression.

"To imply that it's not impactful is very naive and shortsighted," said Teri Ooms, director of the Institute for Public Policy and Economic Development, a Wilkes-Barre-based think tank.

The scandal erupted in January 2009, when Luzerne County Judges Mark Ciavarella and Michael Conahan agreed to plead guilty to federal fraud and conspiracy charges for allegedly accepting $2.8 million in kickbacks from developers of privately operated juvenile detention centers. Conahan, who retired in 2008, and Ciavarella, who resigned from the bench in March 2009, pleaded guilty to fraud and conspiracy charges in February 2009 in the "kids-for-cash" case, but withdrew their pleas last August and face trial on a 48-count racketeering indictment.

In December, Luzerne County Judge Michael Toole resigned and pleaded guilty to fixing cases and income tax fraud. He is scheduled to be sentenced next month in federal court.

Also in December, Greg Skrepenak resigned as a Luzerne County commissioner and pleaded guilty in federal court in January to accepting a $5,000 kickback from a developer who obtained a government loan for a condominium project. Skrepenak is scheduled to be sentenced in June.

In March, a federal grand jury indicted Lackawanna County Commissioner A.J. Munchak and former Commissioner Robert Cordaro on multiple racketeering and fraud counts for allegedly taking $475,000 in kickbacks or bribes related to public projects. Their trial is scheduled for October.

The investigation also enveloped the region's largest private developer. Real estate magnate Robert K. Mericle, whose company owns CenterPoint Commerce and Trade Park in Jenkins Township, pleaded guilty in September to failure to report a federal felony. Investigators said Mericle paid more than $2 million in finder's fees to then-Judges Ciavarella and Conahan to secure contracts to build two privately operated juvenile detention centers, where minors were wrongfully imprisoned.

Perspectives vary on the scandal's development impact, but one theme generates consensus.

"This is an extremely painful period in this community's history," said Larry Newman, a vice president at the Greater Wilkes-Barre Chamber of Business and Industry. "We're working in one of the most-difficult economic cycles that we have seen in a long, long time. It's certainly not helpful."

Austin Burke, president of the Greater Scranton Chamber of Commerce, wonders what the scandal will do to recruitment.

"Are we moving to one more obstacle to progress?" he said. "It's a sad thing for the community and I hope we can put this behind us as soon as possible."

"There's such a scarcity of projects right now that the slightest bit of shooting yourself in the foot clearly hurts you," Boyd said. "The best thing a community can do to take themselves off the short list is to have this kind of scandal."

The upheaval generates publicity damaging the region's image. The details spread through the Internet and social media, in addition to conventional news outlets.

"I've had a number of colleagues who looked me up in the last six months and said 'What the heck is going on there?' " said Ooms, who worked in economic development in California before returning to Northeast Pennsylvania in 2004. "It does not bode well for the area. People have heard about this all over the world."

Kate McEnroe, an Atlanta-based site-selection consultant whose clients include insurers, hospitality and telecommunications companies, recalled watching a popular television crime drama on NBC last spring patterned after the "kids-for-cash" debacle.

"I saw that 'Law and Order' episode," she recalled.

The scandal, though damaging, may lack the notoriety of other recent, high-profile corruption cases.

"The fact is, this is not the first metropolitan area to go through this and it will not be the last," Newman said.

In June, the mayors of Hoboken, Seacaucus and Ridgefield, N.J., were among 44 people charged in an international money-laundering scheme. In December 2008, Illinois Gov. Rod Blagojevich was arrested for allegedly trying to sell the U.S. Senate seat of Barack Obama, then the president-elect.

"Unfortunately, public corruption has become so much more common that it's not as noticeable to people who are considering many communities," Burke said.

It's noticed by rival economic developers, though, who would benefit from the region's sinking image.

"Your neighbors that you compete with all the time are going to do their best to fan the flames," McEnroe said.

"I hear a good bit from businesses that are making decisions about transparency, consistency, what the ground rules are," said Paul Brophy, a planning and urban redevelopment consultant from Columbia, Md. "The more that's kind of hidden, all that stuff really disadvantages a community. It's too easy to go somewhere else."

Over the short-term, developers might have some uncomfortable encounters with potential prospects.

"It's not going to be fun for those guys that are out doing recruitment," McEnroe said.

Prospects have not mentioned the scandal, economic developers insist.

"It's not an issue that has arisen in any relocation discussions that we've had," Newman said.

Changing the culture and perceptions ultimately is the public's responsibility, Brophy said.

"The voters have to send an important signal here - whether it's voting for judge or commissioner - that they are looking for clean government because clean government is going to improve the attractiveness of the area," he said.

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2 posted comments

Thank you for this article, but it seems your colleagues have published other articles that contradict the found corruption.

"Child abuse rate in region higher than state average" By Charles Schillinger (Staff Writer) has promoted a fictitious report generated by Deputy Director William Browning of the Department of Public Welfare to cover up the "kids 4 cash" and other scandals in child welfare by promoting false statistics.

Poverty is, by law, considered child abuse and, thus, will result in higher levels of reporting.

I look forward to you investigating these facts even further. For more information on child abuse propaganda and child welfare fraud, visit: beverlytran.com

Unfortuantly corruption is far to rampent in the northeast brought about by corrupt politicians. We as citizens must demand that our candidates for office are of the highest standards, although that is not always easily identifiable as seen in Lackawanna and Luzurne counties. We must have term limits at all level of government to insure no one becomes entranched in office. Corruption exist at all levels, Local, State and in Washington and the only way to get a handle on it is TERM LIMITS! There is no other way and those in the state house and in washington are the only ones permitted by law to do it, so lets insist on it!